A university scientist and the federal government say they have found persuasive evidence that oil from the massive Gulf of Mexico spill is settling on the ocean floor.

The new findings, from scientists at the University of South Florida and from a broad government effort, mark the latest indication that environmental damage from the blowout of a BP PLC well could be significant where it’s hardest to find: deep under the Gulf’s surface.

There is no practical way to clean up the spilled oil that has settled deep in the Gulf, officials said, adding that microbes in the water could eventually eat it up.

The massive application of dispersants to hide the amount of oil spilled has caused major problems to the Gulf:

The use of dispersants prevented clean up of the oil by skimming, by far the easiest method of removing oil from the water

Dispersants make the toxins in crude oil more bioavailable to sealife, and scientists have found that applying Corexit to Gulf crude oil releases many times more toxic chemicals into the water column than would be released with crude alone (and see this)

Dispersant might have caused some of the chemicals in oil to become airborne (and see this and this)

The crude oil which does not become aerosolized sinks under the surface of the ocean, and can delay the recovery of the ecosystem by years or even decades (see the Wall Street Journal article quoted above)

As I noted in May – shortly after the spill started – the responses of the government to the Gulf Oil spill and to the financial crisis are remarkably similar, as both have focused on covering up the problems, instead of actually fixing them. Because the financial system was never really reformed, the next financial shock will send the economy reeling. Because the oil was never properly cleaned up, the next hurricane will stir up immense quantities of oil now lying on the sea floor.

Extend-and-pretend is being attempted in both cases, and – in both cases – it will fail, because nothing has been fixed, and the fundamentals can only remain hidden for so long.

Moreover, in both cases, the government used “highly toxic” measures to try to hide the real problems. The government has used “emergency measures” and virtually all of its resources to prop up the giant banks instead of using the proven methods of restructuring insolvent banks and prosecuting the criminals who caused the crisis, which has caused major problems for the real economy.

Similarly, the government applied close to 2 million gallons of highly toxic dispersant to hide the amount of oil instead of using it’s resources to deploy tried-and-true clean up methods, which has caused significant problems for the Gulf.

Finally, new and potentially bigger crises will take place, because regulation hasn’t been put in place to prevent them. Regulation of the financial system – including international agreements like Basil III – have been gutted (and see this). And as Time magazine notes:

Congress never managed to pass legislation that would have overhauled drilling safety.